Quality growth takes center stage

Editorial | Mary Ma 7 Mar 2018

Premier Li Keqiang's government report was - as usual - long, and loaded with policy objectives.

The most reported must be his target for economic growth. Li's emphasis was sensible as China, the world's second largest economy, is catching up fast on the top dog, United States.

The intensity of mainland economic activities has a direct impact on others. Li's target for the economy to expand about 6.5 percent this year is unchanged - even though last year's growth exceeded the target to reach nearly 7 percent.

China is probably the only major economy to set a growth target. While other countries have growth projections, they aren't targets.

The nation, with the world's biggest population, sees many millions of people joining the workforce every year.

It's a headache for all governments if jobs aren't created quickly enough. And in the mainland, joblessness would be a potential cause for social and even political instability.

Crude estimates by economists are for 1.72 million jobs to be created for every percentage point of growth. Therefore, a 6.5 percent growth figure would mean 11.2 million jobs being created. Such job-creation figures would be enviable for most countries, but for a nation of some 1.4 billion people, that would be conservative.

Li could have set a higher target, but the consequence would be imprudent investment by local governments that, over the years, have led to a build-up of debts that took Beijing many years to unwind, without letting them burst to disrupt the overall economy.

The 2017 experience has shown that 6.5 percent is a suitable level, around which better quality growth can be expected.

If Li's predecessors had set out grand visions in their reports in the past, this is no longer necessarily the case in the present since the previously symbolic role of the president has now become solid and powerful under paramount leader Xi Jinping.

The grand visions have already been laid out by Xi since the Communist Party's plenum in October, which aim to put China on the road to being a "modestly prosperous" nation by 2020, and a "strong global power" by 2050.

Based on those visions, Li was expected to spell out what his government would do to deliver on them. Similarly, our Financial Secretary Paul Chan Mo-po's budget was expected to reflect Chief Executive Carrie Lam Cheng Yuet-ngor's "new fiscal philosophy."

For example, in support of Xi's policy to extend Beijing's influence far afield, defense spending is being boosted 8.1 percent, the most in three years.

All in all, the premier's work report met the expectations of delegates from around the country, in view of the overwhelming responses throughout his speech. It was 36 pages long and Li drew 55 rounds of applause, with the final one lasting 30 seconds.

That said, there are challenges ahead. Topping the list is a new uncertainty - the dire prospect of trade wars that US President Donald Trump appears hellbent on starting with all possible countries during his second year of office.

Could an escalation in trade tensions hurt China's growth target?

Obviously, the premier was aware of the threat when he said - without naming America - that "the policy changes of the major economies and their spillover effects create uncertainty; protectionism is mounting and geopolitical risks are on the ascent."

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